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Stop Measuring the Wrong ROI

Jason D. Meaux and Nathan R. McCarthy

With the advent of EHRs, many organizations have sought to make the argument for a positive financial ROI). A recent paper from the Institute of Medicine devotes 20 pages to categorizing benefits, expenses, and revenue impacts to make the math work. At the end of the day, it is effort best spent elsewhere. The days of implementing an EHR to gain first-mover advantage over your competitors are over. EHRs are a fact of life, as is the money you will have to spend to implement and maintain one.

Should you throw away all financial analysis? Certainly not! Cost should be a key component of any EHR selection. Both the one-time capital and the ongoing operating costs can have lasting detrimental impacts on an organization if not carefully considered. However, once the system is selected, arguing about a purely financial ROI becomes moot. As with buying a house, it is irrelevant whether you come out ahead in 25 years; the main reason you buy the house is to make it into a home. Similarly, attempting a strictly financial argument to justify the existence of an EHR is no longer a relevant approach.

Many on Wall Street are realizing that basing decisions on stock price or other financial metrics can lead to short-term thinking that can result in adverse long-term consequences. Various public companies have transitioned to a triple bottom line for this very reason (i.e., adding “people” and “planet” to the equation along with profits). They realize the focus should be on the long-term benefits beyond mere financial reward. Similarly, healthcare organizations should concentrate on their own triple bottom line: people, quality, and safety. They should shift the focus away from simple dollars and evaluate the impact on staff and patients. Can we return to pre-EHR productivity? Will our patients experience better coordination of care? Will we eliminate the need for staff to capture and track the same data every time a patient visits our facility? Will the EHR improve safety for our patients? Those are the questions you should be asking.

Most organizations do not implement an EHR for financial gain. Rather, their concerns are with improving care through population management, practicing preventive medicine, creating new care models such as patient-centered medical homes, and improving quality and safety. Why then do financial teams and healthcare administrators continue to spend an inordinate amount of time concentrating on the dollars? Focus on doing what is right for your patients and staff and spend your energy optimizing your EHR year after year. The dollars will follow.

The desire to demonstrate an EHR’s financial ROI should be replaced with an emphasis on long-term benefits and a commitment to maintain and optimize the system, to develop an EHR that meets staff and patient needs, and ultimately to improve care for your patients. Only with a shift to a nonfinancial ROI can organizations make that happen.

With the advent of EHRs, many organizations have sought to make the argument for a positive financial ROI). A recent paper from the Institute of Medicine devotes 20 pages to categorizing benefits, expenses, and revenue impacts to make the math work. At the end of the day, it is effort best spent elsewhere. The days of implementing an EHR to gain first-mover advantage over your competitors are over. EHRs are a fact of life, as is the money you will have to spend to implement and maintain one.

Should you throw away all financial analysis? Certainly not! Cost should be a key component of any EHR selection. Both the one-time capital and the ongoing operating costs can have lasting detrimental impacts on an organization if not carefully considered. However, once the system is selected, arguing about a purely financial ROI becomes moot. As with buying a house, it is irrelevant whether you come out ahead in 25 years; the main reason you buy the house is to make it into a home. Similarly, attempting a strictly financial argument to justify the existence of an EHR is no longer a relevant approach.

Many on Wall Street are realizing that basing decisions on stock price or other financial metrics can lead to short-term thinking that can result in adverse long-term consequences. Various public companies have transitioned to a triple bottom line for this very reason (i.e., adding “people” and “planet” to the equation along with profits). They realize the focus should be on the long-term benefits beyond mere financial reward. Similarly, healthcare organizations should concentrate on their own triple bottom line: people, quality, and safety. They should shift the focus away from simple dollars and evaluate the impact on staff and patients. Can we return to pre-EHR productivity? Will our patients experience better coordination of care? Will we eliminate the need for staff to capture and track the same data every time a patient visits our facility? Will the EHR improve safety for our patients? Those are the questions you should be asking.

Most organizations do not implement an EHR for financial gain. Rather, their concerns are with improving care through population management, practicing preventive medicine, creating new care models such as patient-centered medical homes, and improving quality and safety. Why then do financial teams and healthcare administrators continue to spend an inordinate amount of time concentrating on the dollars? Focus on doing what is right for your patients and staff and spend your energy optimizing your EHR year after year. The dollars will follow.

The desire to demonstrate an EHR’s financial ROI should be replaced with an emphasis on long-term benefits and a commitment to maintain and optimize the system, to develop an EHR that meets staff and patient needs, and ultimately to improve care for your patients. Only with a shift to a nonfinancial ROI can organizations make that happen.

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